This is actually two related diaries in one. I'm finding I don't have enough time to write and participate in more than one decent diary discussion per week. So, this long and involved, written more for the reader who can take some time to think through the arguments than as a quick assault on the Rec List.
I have two proposals regarding health insurance reform:
(1) We should consider threatening to pass two or three health care bills. There's already talk of including some provisions in a "60-vote" bill and putting some in a "50-vote" reconciliation bill. Depending on how those provisions are divided up, we should start out with a bill that puts the Republicans in a position of either favoring or blocking highly popular reform ideas, which then require further legislation.
(2) I think that we're likely to pass a not-all-that-robust public option in reconciliation. (How robust it can be will depend on what's in the first bill.) But we can "hobble" the public option in a way that is relatively fair and relatively easy to change in the future. I think we should prepare to accept that.
I've tried to write this for your grandparents to understand, if you forward it.
(1) Two (or three) bites at the apple
One of the claims made by health insurance reform proponents is that "we only get one bite at the apple when it comes to passing health care legislation." Perhaps this is based on some ignorance of House or Senate procedure, but I'm not convinced that that's true. I think that within the next few months we can pass multiple bills, in series, that put the Republicans in insurers in increasingly worse situations until we accomplish our goal, much like a complicated multi-move combination in chess.
Let's set some things out on the table.
First, some elements of proposed legislation are extremely popular:
- limitations on the ability of private insurers to deny coverage based on pre-existing conditions
- limitations on making such coverage unacceptably expensive
- preventing insurers from rescinding coverage when it is needed based on immaterial alleged misrepresentations at time time an application for insurance was made
- portability, allowing on to keep one's insurance permanently (so long as one makes payments) once one leaves a job, ideally paying what had been charged to the employer
(Collectively, for ease of reference, I'm calling this "pre-existing conditions" reform.)
Republicans and insurers have basically given in on these points, though many of us assume that the insurers' legal wizards are already in their laboratories concocting the next generation of ways to avoid paying people.
Second, eliminating pre-existing condition clauses creates the possibility of adverse selection. That is, those people who aren't likely to need insurance yet don't buy into the system, while someone who hasn't had insurance but suddenly develops cancer is going to buy a policy immediately. You get around this in one of two ways: either register everyone for health insurance, funded out of mandatory premiums or tax dollars, often with (which is what single payer does), or forcing people to register for health insurance themselves, which is what a mandate does. Now, some of those private policies will be lousy ones, but in principle mandates can be in place whether the insurance offered is good or bad.
Third, if insurers (who promise to be good to their customers now) have a new flood of people who have to buy their insurance, they will make gobs of new money. If there is not enough competition for them, they will make gobs of new money, and still try to find loopholes in the laws requiring that they pay consumers what they owe, and they will not work to reduce the prices of the services they provide. So Democrats are promoting cost-containment measures like the public option -- which uses its Medicare-sized purchasing power to get less-expensive, more effective, and more reliable health coverage for customers -- or health insurance co-ops, which use their theoretical but certainly substantially smaller market power to do less of all of the above, and thus are a way of tilting the table to favor insurers.
So, given these parts of legislation:
(a) = pre-existing conditions reform
(b) = universal coverage
(c) = a public option
everyone wants or at least is reconciled to (a), Republicans and insurers want (b), and Democrats and consumers want (c). Note this, though: Insurers would want legislation passing (a) to include (b). If they don't get (b) passed along with (a), then the "insurance" you buy when you get cancer or you turn 40 or whatever may come out of their pocket, leading either to unfavorable pricing for them or to higher premiums for everyone. Democrats, on the other hand, don't want to see (b) enacted without (c), because that allows insurers to gouge consumers.
Now, Republicans have made a tactical mistake here. They have let (a) become very, very popular. That allows Democrats to threaten to do this:
"Let's just pass (a), the ban on pre-existing conditions first, then we'll figure out what we'll do with (b) and (c)"
Let the Republicans try to block a bill with (a) alone in it. See what it does to their ratings. See if conservative Democrats will be willing to block it.
One (a) is passed, insurers NEED (b) to pass or they quite seriously could be driven out of business, even without a public option. That puts us in a better bargaining position as regards negotiating the content of (b) and (c).
Now, Republicans and conservative Dems may try to block this, on the grounds that we should pass (a), (b), and (c) together. The answer to that is that Congress clearly needs to give itself the motivation to get the job done this year. We can likely get (a) separated out and passed if we signal that we will be reasonable about (b) and (c) -- especially, in my view, if we accept a slightly hobbled public option.
(Note: I'm presenting what I think could be a compromise resolution below so that everyone knows it's out there. This isn't and shouldn't be one's opening bargaining position -- but we're all friends here, so who's going to see it, right?)
(2) The Camel's Nose and the Hobbled Option
Here's a mystery: Why has President Obama been saying, so regularly and clearly and publicly, that he does not support a single-payer system? Why make this such a large part of his public presentation this year?
The answer, I believe, is that he's not doing it to convince the public of anything. He's doing it to be seen doing it -- to be seen, specifically, by the private health insurance industry.
Favoring single-payer, by definition, means trying to put that industry out of business. That means that they fight as if their lives depend on it. Obama wants them -- and those watching -- to know that his plan allows them to live long and prosper -- if they are efficient and well-behaved.
In a story posted on Friday, mcjoan asked in Democratic Rep. Rich Boucher was "Opposing Public Option Because It Would Be Too Popular?" Boucher, who is inclined towards co-ops, had said:
"I have a problem with this government option plan," Boucher said. "I’m troubled that the government option plan could become very popular and if it became sufficiently popular it could begin to crowd out the other" private insurance companies."
Obviously, if you read Boucher's comments as being that he doesn't support the public option because it would be too politically popular -- and if you read the comments to the story, you'll see that a lot of people did, then Boucher sounds like a complete idiot and a caricature of the Democrats aversion to victory.
That's not what he was saying, as everything after the word "and" makes clear. Claiming that that was his point just makes us sound either dumb or like liars. He was saying that he thinks that the public option could be the "camel's nose under the tent" that leads to a single-payer system. Therefore, if someone like President Obama doesn't like single-payer, for whatever reason, that reason should lead them to oppose the public option.
Now the prospect that the public option will inevitably lead to single-payer is why many people here like it. But, if we don't have the support for single-payer, then supporting "stealth single-payer" is disingenuous. The problem with its being disingenuous is less that it's morally wrong than that it won't work: the charges that the public option becomes a stalking horse for single-payer then have bite, and we won't get Boucher's vote or that of many others of his more conservative colleagues. (Well, at least we won't if we haven't already passed the pre-existing condition reform.)
So, until and unless we have the votes (and the reliable support in society at large) to get rid of the health insurance industry altogether, we have to accept that a public option can't be allowed to drive them out of business. (Many of you are now booing your screens -- all I have to say to you is that if you want health insurance and you don't think you have the votes to kill off insurers, this is where you have to end up. Sorry.)
Various plans have been proposed to hobble the public option:
- turn it into co-ops so it will be smaller and have less negotiating power
This is a bad idea for reasons that have been expressed elsewhere, mostly that co-ops for health insurance don't have a track record of working.
- phase in the public option only if certain "triggers" are activated by health insurance companies not doing what they promised or should
This is a bad idea because it will take too long; we want the Democratic Administration and Congress to be the ones who can react to such failures and possible punish insurers with single-payer if they act in bad faith.
- give private insurers some breathing space by charging people higher premiums than they might be able to obtain under an efficient and effective public option
This idea, I argue, has real potential. In fact, it's great, because it puts the future political pressures in our favor.
The idea of doing this came to me when I watched heard U of Colorado student Zack Lane's question at Obama's health care town hall in Colorado about the public option:
We all know the best way to reduce prices in this economy is to increase competition. How in the world can a private corporation providing insurance compete with an entity that does not have to worry about making a profit, does not have to pay local property taxes — (applause) — they do not have to — they’re not subject to local regulations? How can a company compete with that?
As Obama said, that's a good question. Obama said that he doesn't want the taxpayer to be shoveling more and more money at a public option to put private insurers out of business. While Obama didn't mention the extra cost of having certainly unionized workers, there are advantages to a government program such as not having to pay property taxes, exemption from certain regulations, lower cost of capital, that will allow government to charge less for premiums. And Obama's answer, that there are already private actors competing with government in some areas. (Yes, UPS and FedEx compete with USPS -- but not on first-class mail.) This is also what led to Obama's statement that the public option was not the entirety of health-care reform.
Obama said that a public option wouldn't be allowed to borrow money from the government at lower rates, etc., to allow it to market a less-expensive product. All that is fine, but there will no doubt still be differences -- like the need to pay property taxes -- in the circumstances in which a public plan competes with private plans. How do we deal with those legitimately "unfair advantages" that a public option would have?
That's really simple: we do what racetracks do with horses who have lighter jockeys. If your horse has an unfair advantage because your jockey weighs less than the 126 pounds (or whatever) that jockeys are allowed to weigh, then they just add that much weight to what the course has to carry. (In fact, there is a whole set of rules setting out other weight handicaps as well.) So if, in fact, the public option gets an advantage because it is government sponsored, we just add dollars to the premiums that it must charge, to equalize things with a well-run private plan. And by "well-run," I mean a plan that doesn't put its money into expensive ads and a huge legal force dedicated to denying people coverage. That extra money in premiums would go into paying for the program and into profits.
Some board of experts could assess which categories of expenses would and which would not justify what are in effect price supports for the health insurance industry. The amount of the "handicap" could be adjusted annually, adjusted based on certain triggers (such as which insurers end up with most of the worst and most expensive cases due to adverse selection -- which I'll bet will mostly fall onto the government's lap), etc. The government administers much more complicated programs than this -- and given that everyone is saving money from our no longer having to worry about pre-existing conditions, everyone should be pretty happy.
Of course Zack Lane mentioned three things that gave a public insurer an unfair advantage on private ones: not paying property taxes (fair point!), being exempt from local regulation (seems plausible...) and -- profits.
Do we want to provide price supports for health insurance industry profits into the initial public option proposal? Do we want to make people pay more for their mandatory health insurance so that insurers can make a profit over their unnecessary provision of services?
People will disagree about this, but my answer is: sure, at first. That's not my opening position, but I would allow Rick Boucher and Olympia Snowe to convince me to put it into a final bill, based on the idea that just as public insurance keeps private insurers honest, private insurers may keep a public insurer honest.
So I'd allow, only as a concession to Republicans, for a public insurer to charge people oh, $50 extra per month so that private insurers could stay in business. Sure, I'd allow that ...
... AND THEN I WOULD RUN AGAINST IT EVERY YEAR!
In other words, once the public option is in place, with artificially inflated prices for mandatory insurance so that private health insurers can stay in business, I would get my political flyers printed up saying that I propose to save every American $600/year by eliminating these subsidies for health insurers. Maybe we're not going to roll back the prices the first year, maybe not the second, but every year this de facto subsidy is there, Democrats can run, in effect, on lowering taxes. This puts the private insurers clearly in opposition to consumer interests, and that makes me happy, even though I'd rather have the money.
If we accept a "hobbled option" that is hobbled the right way, as with racehorses enduring a weight handicap rather than being whacked on the knee with a wrench, then everyone comes out ahead in the years to come except Republicans. I can live with that.
(3) Conclusion
So, let me be clear about some things:
- When I say that "I can accept a bill without a public option," I am talking only about an initial bill, which I expect will be followed by -- will have to and be more likely to be followed by a bill with a public option, not that I no longer support the public option at all. I simply am proposing a two-step combination in this chess match rather than a single move.
- When I say that "I can accept Congress passing a hobbled public option" -- because I don't like using the word "handicapped" -- I am talking solely about one that includes price supports for legitimately justifiable differences between public and private insurance, and that I reserve the right to challenge those supports politically for years to come.
The thing I like most about this plan is that it seems to me to be achievable. I believe that we can pass a plan of this sort this year. And I believe that we can campaign on improving a plan like this next year. And I don't think that the Republicans, or the Blue Dogs, or anyone else can stop us if we play this hand right.
I'm not used to being optimistic about reform, but I'm feeling that way right now.